Economics Study guide 2

Substitutes

A "substitute" or "substitute good" is a product or service that a consumer sees as the same or similar to another product.

Commodity

A commodity is a marketable item produced to satisfy wants or needs. Economic commodities comprise goods and services.

Complements

Car-Gasoline

Cross Elasticity of Demand (XED)

Cross elasticity of demand (XED) is the responsiveness of demand for one product to a change in the price of another product. Many products are related, and XED indicates just how they are related.

Inferior Goods

In economics, an inferior good is a good that decreases in demand when consumer income rises (or rises in demand when consumer income decreases), unlike normal goods, for which the opposite is observed.

Normal Goods

In economics, normal goods are any goods for which demand increases when income increases, and falls when income decreases but price remains constant

Income Elasticity of Demand (YED)

Income elasticity of demand (YED) shows the effect of a change in income on quantity demanded.

Price Elasticity of Supply

Price elasticity of supply (PES) is a measure used to show the responsiveness, or elasticity, of the quantity supplied of a good or service to a change in its price.

Price Elasticity of Demand (PED)

is a measure used to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price, ceteris paribus.

Elasticity

the degree to which a demand or supply is sensitive to changes in price or income.